1.  We have audited the attached Balance Sheet of Bharat Electronics
 Limited as at 31st March 2011, the Profit and Loss Account and also the
 Cash Flow Statement for the year ended on that date annexed thereto.
 These financial statements are the responsibility of the Company''s
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit.
 
 2.  We conducted our audit in accordance with auditing standards
 generally accepted in India. Those Standards require that we plan and
 perform the audit to obtain reasonable assurance about whether the
 financial statements are free of material misstatement. An audit
 includes examining, on a test basis, evidence supporting the amounts
 and disclosures in the financial statements.  An audit also includes
 assessing the accounting principles used and significant estimates made
 by the management, as well as evaluating the overall financial
 statement presentation. We believe that our audit provides a reasonable
 basis for our opinion.
 
 3.  As required by the Companies (Auditor''s Report) Order, 2003 (as
 modified on 25 Nov 2004) issued by the Central Government in terms of
 sub-section (4A) of section 227 of the Companies Act, 1956, we enclose
 in the Annexure a statement on the matters specified in paragraphs 4
 and 5 of the said Order.
 
 4.  Further to our comments in the Annexure referred to in Paragraph 3
 above, we report that:
 
 a.  We have obtained all the information and explanations which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit.
 
 b.  In our opinion, proper books of account, as required by law, have
 been kept by the Company in so far as it appears, from our examination
 of those books.  The audit of the accounts of Bangalore, Hyderabad and
 Chennai Units and Corporate Office were carried out by us, whilst the
 audit of Ghaziabad, Panchkula, Kotdwara, Pune, Navi Mumbai and
 Machilipatnam units were audited by respective branch auditors. The
 reports of branch auditors have been considered by us while preparing
 our report. In the case of New York and Singapore offices, not visited
 by us, in respect of which the accounts are maintained at Corporate
 Office, the returns / records received from the said offices have been
 verified and found to be adequate for the purpose of our audit. We
 further state that the disclosure in Note No. 23 of Schedule 21 of
 Company''s share of Assets, Liabilities, Income and Expenses in the
 Joint ventures is based on audited financial statements of GE BE Pvt.
 Ltd. and audited financial statements of BEL Multitone Pvt. Ltd., as
 provided by the respective operators of Joint Ventures.
 
 c.  The Balance Sheet and the Profit and Loss Account and Cash Flow
 Statement dealt with by this report, are in agreement with the books of
 accounts of this Company ;
 
 d.  In our opinion, the Balance Sheet, Profit and Loss Account and Cash
 Flow Statement dealt with by this report comply with the accounting
 standards referred to in Section 211(3C) of the Companies Act, 1956,
 read with Section 211(3B) of the Companies Act, 1956 and Item No. 18 on
 Notes on Accounts regarding Segment Reporting.
 
 e.  As the Company is a Government Company, it is exempt from the
 provisions of Section 274 (1) (g) of the Companies Act, 1956 regarding
 disqualification of directors.
 
 f.  In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts read together with the
 Significant Accounting Policies and the Notes forming part of accounts
 give the information required by the Companies Act, 1956, in the manner
 so required and give a true and fair view in conformity with the
 accounting principles generally accepted in India :
 
 i) In the case of the Balance Sheet, of the State of Affairs of the
 Company as at 31st March, 2011,
 
 ii) In the case of the Profit and Loss Account, of the Profit of the
 Company, for the year ended on that date.
 
 iii) In the case of Cash Flow Statement, of the Cash Flow for the year
 ended on that date.
 
 Annexure referred to in Para 3 of our report of even date on the
 Accounts of Bharat Electronics Limited, for the year ended 31st March
 2011
 
 (i) (a) The Company has generally maintained proper records showing
 full particulars including quantitative details and situation of fixed
 assets.
 
 (b) As explained to us, the Management has generally carried out the
 physical verification of a portion of the Fixed Assets in accordance
 with their phased programme of physical verification, which is
 considered reasonable having regard to the size of the Company and
 nature of its business and discrepancies, if any, were properly dealt
 with on such verification during the year.
 
 (c) During the year, the Company has not disposed off substantial
 portion of the Fixed Assets.
 
 (ii) (a) The Raw material, Stores and Spare Parts, Tools, Work in
 Progress and Semi - Finished goods inventory with the Company have been
 physically verified during the year by the Management. In our opinion,
 the frequency of verification is reasonable. In case of finished goods,
 stock verification was done at year end.
 
 (b) The procedures of physical verification of Raw Material inventories
 followed by the Management are generally reasonable and adequate in
 relation to the size of the Company and the nature of its business.
 
 (c) The Company is maintaining proper records of inventory. The
 discrepancies noticed on verification between the physical stocks and
 the book records were not material and have been appropriately dealt in
 the books. In the case of materials with sub-contractors confirmations
 from certain sub-contractors were not obtained and in this regard
 please refer Item No. 9(a) of Notes to Accounts.
 
 (iii) The Company has not granted / taken any loans to / from parties
 covered in the register maintained under Section 301 of the Companies
 Act, 1956 and hence, Clause No. iii of Companies Audit Report Order,
 2003, as amended in 2004, is not applicable.
 
 (iv) In our opinion and according to the information and explanations
 given to us, there are adequate internal control systems commensurate
 with the size of the Company and the nature of its business with regard
 to purchases of inventory, fixed assets and with regard to the sale of
 goods and services. During the course of our audit, we have not
 observed any continuing failure to correct major weaknesses in internal
 control system.
 
 (v) According to the information and explanations given to us, we are
 of the opinion that there are no transactions that need to be entered
 in register maintained under Section 301 of the Companies Act, 1956.
 
 (vi) Company has not accepted any deposit from public in the current
 year and all deposits had matured and settled except for Rs. 38.55 Lakhs,
 out of which Rs. 36.50 lakhs are being retained as per Garnishee Order of
 Lok Ayukta, Bangalore and the balance Rs. 2.05 lakhs though matured have
 not been claimed by the depositors. In our opinion and according to the
 information and explanations given to us, the Company has complied with
 the provisions of Section 58A and 58AA and other relevant provisions of
 the Companies Act, 1956 and the Companies (Acceptance of Deposits)
 Rules, 1975.
 
 (vii) In our opinion, the Company has an internal audit system
 commensurate with the size and nature of its business.
 
 (viii) The Company pursuant to the Rules made by the Central Government
 for the maintenance of cost records under section 209 (1) (d) of the
 Companies Act, 1956 has to maintain cost records for Electronic
 Products and we are of the opinion that prima facie the prescribed
 accounts and records have been made and maintained. However, we have
 not made a detailed scrutiny of the same.
 
 (ix) (a) The Company is generally regular in depositing with
 appropriate authorities undisputed statutory dues including Provident
 Fund, Investor Education and Protection Fund, Employees'' State
 Insurance, Income Tax, Sales Tax (VAT), Wealth Tax, Service Tax,
 Customs Duty, Excise Duty, Cess and other material statutory dues
 applicable to it.
 
 (b) According to the information and explanations given to us, no
 undisputed amounts payable in respect of Income Tax, Service Tax, Sales
 Tax(VAT), Customs Duty, Excise Duty and Cess were in arrears, as at
 31st March 2011 for a period of more than six months from the date they
 became payable.
 
 (c) According to the information and explanations given to us, there
 are no dues of Income Tax, Service Tax, Sales
 
 Tax(VAT), Customs Duty, Excise Duty and Cess which have not been
 deposited on account of any dispute except as follows :
 
                                       Amount  
 
 Nature of            Nature of                  Forum where dispute
                                     disputed  
 Statute                  Dues                   is pending
                                      (Rs. in 
                                        Lakhs)
 
 The Central          Excise Duty       64.90    Customs, Excise and
 Excise Act, 1944     Demand                     Service Tax Appellate
                                                 Tribunal, New Delhi
 
                                        57.26    CESTAT
 
                                        49.85    Commissioner (Appeals)
 
 U.P. Trade Tax       Benefit of         1.97    Case remanded to
 Act, 1948            Concessional               1st Appellate Authority
                      Form 3D not
                      allowed (Year
                      1979-80)
 
 U.P. Trade Tax       Benefit of         1.17    Appeal filed with DC
 Act, 1948            Concessional              (Appeals) for acceptance
                      Form 3B and                of Duplicate Copy of
                      3D not allowed             3D(1)
                     (Year 1991-92)
 
 Central Sales Tax    Sales Tax dues     7.95    Case remanded to
 Act, 1956            and benefit of             Deputy Commissioner
                      Concessional              (Appeal)
                      Form  C  (Year
                      1980-81)
 
 Central Sales Tax    Benefit of         2.21    Case remanded to AC
 Act, 1956            Concessional              (Appeal)
                      Form D not
                      allowed (Year
                      1989-90)
 
 Central Sales Tax    Central Sales 
                      Tax              482.09    Sales Tax Appellate
 Act, 1956                                       Tribunal
 
 Income Tax (TDS)     Applicability of  73.37    Income Tax Appellate
                      194 Cor 194 I              Tribunal, Delhi
                     (Financial Year
                      2007-08 and
                      2008-09)
 
 ESI Act, 1948        Interest and       3.52    Punjab and Haryana
                      damage towards             High Court, Chandigarh
                      late deposit.
 
 Sales Tax Act,       Sales Tax         66.44    Commissioner of
 Bihar                                           Commercial Taxes
                                                (Appeals), Chirkunda,
                                                 Bihar
 
 AP. Sales Tax        Sales Tax         21.66    DC (Appeals),
                                                 Secundarabad Division,
                                                 Hyderabad
 
 Karnataka Sales Tax  Sales Tax      1,584.99    JC (Appeals), Bangalore
 
 Service Tax          Service Tax        8.42    Commissioner (Appeals)
 
 Service Tax          Service Tax       34.01    High Court of Karnataka
 
 Service Tax          Service Tax      103.38    Commissioner
 
 Andhra Pradesh VAT   Sales Tax         26.04    Sales Tax Appellate 
                                                 Tribunal
 
 Trade Tax            Benefit of       220.08    Uttrakhand High Court,
                      Concessional               Nainital
                      Form not
                      allowed
                     (Year 2001-02)
 
 Urban Land Tax       Land Tax          41.44    Land Tax Authorities
 
 Vacant Land Tax      Land Tax          10.35    Land Tax Authorities
 
 (x) The Company does not have accumulated losses as at the end of the
 financial year and has not incurred Cash losses during the financial
 year and in the immediately preceding financial year.
 
 (xi) In our opinion and according to the information and explanations
 given to us, the Company has not defaulted in repayment of dues to
 bank.
 
 (xii) According to information furnished, the Company has not granted
 loans and advances on the basis of security by way of pledge of shares,
 debentures and other securities.
 
 (xiii) The Company is not a chit fund or a nidhi / mutual benefit fund
 / society. Therefore, the provisions of clause 4(xiii) of the Companies
 (Auditor''s Report) Order, 2003 are not applicable to the Company.
 
 (xiv) The Company is not dealing in or trading in shares, securities,
 debentures and other investments. Accordingly, the provisions of clause
 4(xiv) of the Companies (Auditor''s Report) Order, 2003 are not
 applicable to the Company.
 
 (xv) The Company has not given any guarantee for loans taken by others
 from banks or financial institutions.
 
 (xvi) The Company has not availed any term loan and hence, clause (xvi)
 of CARO 2003 is not applicable.
 
 (xvii) According to the information and explanation given to us and on
 an overall examination of the Balance Sheet of the Company, we report
 that no funds raised on short term basis have been used for long term
 investment.
 
 (xviii) The Company has not made preferential allotment of shares to
 parties covered in the register maintained under Section 301 of the
 Companies Act, 1956.
 
 (xix) The Company has not issued any debentures.
 
 (xx) The Company has not raised money by Public Issues and hence Clause
 4 (xx) of CARO 2003 is not applicable to the Company.
 
 (xxi) During the course of our examination of the books and records of
 the Company, carried out in accordance with the generally accepted
 auditing practices in India, and according to the information and
 explanations given to us, we have neither come across any instance of
 fraud on or by the Company noticed or reported during the year nor have
 we been informed of any such case by the management, that causes the
 financial statements to be materially misstated.
 
                                               For R G N Price & Co.
 
                                              Chartered Accountants
 
                                                      H S Venkatesh
 
                                                            Partner
 
 Bangalore                                  Firm Regn.  No. 002785S
 
 29th June 2011                               Membership No. 026666